The 3 Best Stocks to Buy With Your Tax Refund in 2024

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The IRS typically gives tax refunds within 21 days of filing your tax return electronically. The process takes longer for paper returns, but you could end up with some extra money for tax refund stocks. Using your refund for promising assets could help next tax season. Investing in stocks can also move you closer to your long-term financial goals. 

These three stocks are good contenders if you’re unsure where to invest your tax refund.

Alphabet (GOOG, GOOGL)

Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) dominates online advertising and cloud computing industries. The stock is outperforming the market with a 14% year-to-date gain and is approaching a $2 trillion market cap. Shares still trade at a reasonable 29 P/E ratio.

The tech giant reported strong financials in Q4 2023 that suggest more gains may be coming. The company reported 13% year-over-year revenue growth and grew its net income by 52% year-over-year. Google Cloud was a major contributor that generated $9.19 billion in the quarter. That’s more than 10% of the company’s total revenue. 

The company’s profit margins should grow as Google Cloud gains market share. Advertising is also quite profitable in its own right, and Alphabet’s commitment to cost-cutting can lead to more profits. Analysts are feeling bullish on the stock and believe it has a 5% upside from current levels. It’s rated as a “Strong Buy” among 37 analysts.

Amazon (AMZN)

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Amazon (NASDAQ:AMZN) also has a lot of support among Wall Street analysts. It’s rated as a “Strong Buy” among 41 analysts and does not have a single “Hold” or “Sell” rating. The stock is projected to gain 13% at current levels. The highest price target of $230 per share indicates the tech conglomerate can gain an additional 24%.

Amazon stock has been outperforming the stock market. It’s up 82% over the past year and has had a strong start. Shares have gained 24% year-to-date amid rising profit margins and double-digit revenue growth rates. 

The company reported a record $170.0 billion in Q4 2023. That’s a 14% year-over-year increase in net sales. Amazon Web Services was a notable performer, delivering 13% year-over-year revenue growth.

Amazon’s two main strengths are its online marketplace and cloud computing. However, the company is gaining momentum in its advertising and streaming business segments. Amazon anticipates revenue from $138.0 billion to $143.5 billion in Q1 2024. This range suggests an 8% to 13% year-over-year growth rate compared to Q1 2023. 

ServiceNow (NOW)

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Cloud computing company ServiceNow (NYSE:NOW) helps businesses operate more efficiently. ServiceNow allows businesses to create chatbots and workflows to increase productivity. The stock has been hit by analysts who currently rate it as a “Strong Buy.” The stock has a projected 11% upside, but some analysts believe it can go higher. The highest price target of $1,000 per share indicates a potential 30% upside.

ServiceNow has revenue growth and profit margin expansion to support analysts’ high price targets while net income jumped by 97% year-over-year. Those growth rates helped ServiceNow exceed a 10% net profit margin.

The company has an impressive 1,897 customers paying more than $1 million per year. ServiceNow has more than 8,100 total customers and a 99% renewal rate among them. The high renewal rate gives ServiceNow pricing power. A price hike likely won’t do much damage to the company’s total number of customers. ServiceNow primarily serves enterprises and has 85% of the Fortune 500 companies as its customers. The stock is up by 188% over the past five years.

On this date of publication, Marc Guberti held long positions in GOOG, AMZN and NOW. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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